LITTLE ROCK, Ark. (AP) - Arkansas Medicaid officials said Thursday they're no longer proposing cuts to nursing home care and three other areas after lowering the projected shortfall the program faces next year to $61 million.

The Department of Human Services, which last year had detailed $138 million in cuts Medicaid faced in the budget that begins July 1 because of a deficit, lowered the estimate after the program's costs came in $21 million under budget for the first half of the current fiscal year.

Democratic Gov. Mike Beebe told lawmakers at the start of this year's session that the lower spending so far this year meant the state could avoid the nursing home cuts, which would have affected as many as 15,000 seniors in the state. The department said it also no longer planned to eliminate Medicaid's adult dental program, an insurance program for low-income workers and community-based services for the elderly.

"No one wanted to cut funding for nursing care so I think this will be very welcome news," DHS Director John Selig said in a statement. "Medicaid staff have worked hard to manage the program tightly and to be as innovative as possible."

The shortfall assumes that lawmakers will approve Beebe's proposal to use $90 million in general revenue and $140 million from the state surplus to shore up Medicaid's budget. DHS said it's still proposing cuts in other areas and rate freezes for some providers to make up the lowered shortfall.

DHS said Medicaid's growth is the lowest it has been in 25 years, and credited much of the savings to the state's efforts to change the way Medicaid pays for services from a fee-for-service model to one where it pays for "episodes" of care.

"While the initiative only includes a handful of disciplines so far, other providers are getting ahead of the game and adopting a similar philosophy that benefits both our patients and our state budget," Beebe said.

State legislative leaders, who had proposed using more of the state's surplus than Beebe has proposed to avoid the cuts, welcomed the news.

"It's a positive thing," House Speaker Davy Carter, R-Cabot, told reporters. "It's another material piece of data that keeps rolling off the line that we're getting as the session moves on. To me, it means that it's less money that we have to worry about funding short-term."

The new shortfall also came out as lawmakers are weighing whether to expand the state's Medicaid program's eligibility under the federal health care law. Beebe backs the expansion but has faced resistance from the Republican-led House and Senate.